Having many unknown areas that are up for exploration, SaaS is quite an adventure.
The first part is no exception for product marketing teams.
The key to success is to interpret the signals in their data-driven world since preparing campaigns in which they apply strategies toward potential customers isn’t the only business objective they have.
Knowing which metrics are relevant and keeping track of them to measure product marketing success plays a big part in the role of product marketing.
Product marketers learning that one metric doesn’t rule them all
That’s the reason why this article will focus on the essential metrics and KPIs to track in order to see whether your product marketing strategy is successful or not.
Let’s get it started!
What Are Product Marketing Metrics?
Product marketing metrics are the elements that measure the success of your product marketing plan. In other words, they are the key metrics determining how successful your product marketing campaign is by using marketing analytics. Tracking these metrics helps teams plan for new strategies to increase product success and profitability even more. With the insight these metrics provide, product marketing managers meet with internal teams to adjust the product roadmap and design a new market strategy to drive higher performance.
What are Product Marketing KPIs?
Product marketing KPIs (Key Performance Indicators) serve the same purpose as product marketing metrics, but there’s one difference: KPIs measure progress related to specific business goals while metrics measure the overall business health. To track the success of a KPI, you must include metrics in the procedure. P.S. Keep in mind that while all KPIs are metrics, not all metrics are KPIs.
Why metrics and KPIs are the base of product marketing?
Metrics and KPIs play a key role in each internal team reaching the short-term goals they set at the start of each period or the long-term ones that are decided each year. But for product teams, they act as fuel to the fire, which is full of product goals.
The data these metrics provide is crucial for both product success, and marketing success since building insanely great products isn’t enough for the future of businesses; there must be people to track the numbers to make decisions regarding the product life cycle, pricing strategies, and product development starting from the product launch to secure a solid place in the target market.
Base SaaS Metrics and KPIs
Product marketing managers should always align themselves with the company goals and connect teams to prepare an effective product marketing strategy which includes a joint business strategy. Here are the base SaaS metrics and KPIs that each team makes use of:
1- MRR (Monthly Recurring Revenue)
MRR (Monthly Recurring Revenue) is a metric used among subscription businesses. This business type experiences new customers signing up and current customers churning out; thus, revenue fluctuates. MRR catches the changes in revenue for business owners to see. In addition, MRR makes it possible to forecast future revenue.
To calculate MRR, all you have to do is multiply the number of customers under monthly plan by ARPU (Average Revenue per User).
Monthly Recurring Revenue (MRR) = The Number of Monthly Customers * Average Revenue per User (ARPU)
2- LTV (Customer Lifetime Value)
LTV, also known as CLV and CLTV, is short for Customer Lifetime Value. It’s used to determine how much each customer will spend on your product or service throughout the entire relationship. In other words, it’s the estimated revenue a business can expect to earn from one customer.
To calculate LTV, you have to use two metrics: Customer Value and Average Customer Lifespan. Customer Value can be found by multiplying the average purchase value by the average number of purchases. Then, all there is left to do is multiply what you’ve acquired by the Average Customer Lifespan.
Customer Lifetime Value (LTV) = Customer Value (Average Purchase Value * Average Number of Purchases) * Average Customer Lifespan
3- CAC (Customer Acquisition Cost)
CAC stands for Customer Acquisition Cost. CAC calculates how much a business spends to acquire a new customer. Basically, it’s the cost of converting a prospective customer into a customer. It’s often compared with LTV to evaluate how profitable a specific period has been for a business.
To calculate CAC, you have to divide the amount of money you spend on marketing and sales to acquire new customers in a specific period by the number of new customers you welcome in that period.
Customer Acquisition Cost (CAC) = Cost of Sales and Marketing / Number of New Customers
4- NPS (Net Promoter Score)
NPS is the Net Promoter Score, demonstrating how likely a customer is to recommend your product or service to other people. One question takes the lead here: On a scale from 0 to 10, how likely is it for you to recommend us?
The people whose answers are 9 or 10 belong to the group “Promoters,” the ones answering 7 or 8 are called “Passives,” and those who suggest that it’s something between 0 and 6 count as “Detractors.”
To calculate NPS, all you have to do is subtract the percentage of the detractors from the percentage of the promoters.
Net Promoter Score (NPS) = % Promoters – % Detractors
5- Early Churn
Early Churn is the process in which a user stops using your services at an early stage. It contains a new user who signs up for your product, uses it for some time, and then stops using it.
Don’t mistake this one for regular churn rate since they differ in terms of timing. Since retention rates are one of the concepts that matter the most for a product marketer, early churn is a dangerous signal which proves that customers aren’t able to maintain short-term retention with the product or service—indicating that the product marketing efforts haven’t paid off because the desired outcome is unattained.
Customer Retention Rate (CRR) is the duration you get to keep your customers on board. It nurtures promotion strategies as it paves the way for higher revenue, better cash flow, and an enhanced company image. Also, it’s closely related to creating and assessing customer loyalty.
To calculate Customer Retention Rate, you have to subtract the number of customers you’ve acquired within a given period from the total amount of customers within the same period. Then, divide the result by the number of existing customers at the start of the very same period. By multiplying what you’ve obtained by 100, you’ll get your CRR.
Customer Retention Rate (CRR) = [(E-N)/S] x 100
E = Number of the total customers at the end of a specific period
N = Number of new customers within a specific period
S = Number of existing customers at the beginning of a specific period
Conversion Metrics and KPIs
Without a doubt, one of the main responsibilities of product marketing managers is conversion. This is all due to the nature of conversions, which includes the marketing message causing the target customer to perform a desired action. Namely, it’s getting someone to respond to your call-to-action for a product marketer.
Here are four conversion metrics and KPIs for you to check:
7- Visitor to Free Trial Conversions
Visitor to Free Trial Conversion Rate represents the percentage of visitors who sign up for your free trial. Thus, it reveals how effective your promotion strategies are since a successful product marketing strategy is what drives visitors into signing up for a product’s free trial.
To calculate your Visitor to Free Trial Conversion Rate, you need to divide the number of visitors who signed up for a free trial by the total number of visitors.
Visitor to Free Trial Conversion Rate = Number of Visitors Signing Up for Free Trial / Total Number of Visitors
8- Visitor to SQL Conversions
Visitor to SQL (Sales-Qualified Lead) Conversion Rate represents the percentage of visitors who have entered the sales funnel.
To calculate your Visitor to SQL Conversion Rate, you need to divide the number of visitors who became sales-qualified leads by the total number of visitors.
Visitor to SQL Conversion Rate = Number of Visitors Becoming SQLs / Total Number of Visitors
9- Free Trial/SQL to PQL Conversion
Free Trial to PQL Conversion Rate represents the percentage of users who entered the sales funnel after experiencing the value of the product by signing up for a free trial.
To calculate your Free Trial to PQL Conversion Rate, you need to divide the number of users who became product qualified leads by the total number of users who signed up for a free trial.
Free Trial/SQL to PQL Conversion Rate = Number of Users Becoming PQLs / Total Number of Users Signing Up for Free Trial
10 – Free Trial to Paid Conversions
Free Trial to Paid Conversion Rate represents the percentage of visitors who became paid customers after a free trial.
To calculate your Free Trial to Paid Conversion Rate, you need to divide the number of users who converted after a free trial by the number of users who signed up for a free trial.
Free Trial to Paid Conversion Rate = Number of Users Converting after Free Trial / Total Number of Users Signing Up for Free Trial
User Onboarding/Adoption Metrics and KPIs
One of the product marketing goals is to integrate itself with user onboarding to get more positive responses to the CTA (Call-to-Action) that their core marketing message includes. Thus, product marketing managers are utterly concerned with both user onboarding and user adoption.
Let’s go through six of them together:
11- Product Adoption Rate
Product Adoption Rate shows how many new sign-ups are actively using your product after adopting it. This metric is highly important as it’s directly related to the retention rate and reveals how sticky your product is for new users.
To calculate Product Adoption Rate, you have to divide the number of new users by the total number of users. Then, you just multiply the input you’ve acquired by 100. There you go!
Product Adoption Rate = (Number of New Users / Total Number of Users) * 100
12- Feature Adoption Rate
Feature Adoption Rate shows how often a specific product feature is used. Having users employ more features means that they will receive more value from utilizing your product. Ultimately, they will become more likely to keep on using your product instead of abandoning it.
To calculate your Feature Adoption Rate, you have to divide the number of monthly active users of a specific feature by the number of users who logged in within the same period. Then, all you have to do is multiply the result by 100.
Feature Adoption Rate = Number of Monthly Active Users Using a Specific Feature / Number of Users Logging in Within the Same Period
13- Time to Value
Time to Value (TTV) shows the amount of time a customer takes to find value from your product. It’s critical as you have a limited amount of time to prove the product’s worth to the customers before they start churning. That’s why you should aim to lower your TTV so that new customers perceive value faster and never leave your side by becoming loyal, long-term customers.
14- User Activation/Aha Moment
Similar to Time to Value, both User Activation and Aha Moment show the crucial point where your customers respond to your CTA—in slightly different ways. User Activation occurs when a user decides to convert from a free trial to a paid account, while Aha Moment makes up the exact moment where your customers perceive the real value of your product and how valuable it’ll be for them to use it in their daily lives.
15- Onboarding Content/Guide Views
Onboarding Content/Guide Views show how many users actually view the onboarding material they’ve been handed. For product marketing, it’s vital to display all of the core product features to make users understand how the product works and guide users to their respective Aha moments by maintaining feature engagement throughout onboarding.
16- Onboarding Content/Guide Completion Rate
Onboarding Content/Guide Completion Rate shows the percentage of users who completed the onboarding from head to toe. Your ideal customers going through your onboarding flow is a really important element in converting them. That’s why you should observe where they abandon onboarding and improve that part to help them complete the whole guide.
In the end, the higher your onboarding guide completion rate is, the more likely the users will be to convert.
Product Engagement Metrics and KPIs
For product engagement to be maintained, product marketing has to nail product messaging. If done correctly, users will spend more time going into the product to experience how it provides what it offers.
Also, product engagement supports customer engagement since the more users familiarize themselves with the product, the more they use and become loyal customers of your business.
That’s the sole reason I’m introducing you to these four metrics and KPIs:
17- MAU, WAU, DAU
These three KPIs display your active user percentage, which is a sign that can be used as a basic preview of growth since they give information on how well a company is at retaining existing customers.
- MAU stands for Monthly Active Users. It refers to the number of unique customers who interact with your product or service within a month.
To calculate MAU, you have to find the sum of each month’s unique active users. Then, divide that result by 12.
Monthly Active Users (MAU) = Sum of Each Month’s Unique Users / 12
- WAU stands for Weekly Active Users. It refers to the number of unique customers who interact with your product or service within a week.
To calculate WAU, you have to find the sum of each week’s unique active users. Then, divide that result by 7.
Weekly Active Users (WAU) = Sum of Each Week’s Unique Users / 7
- DAU stands for Daily Active Users. It refers to the number of unique customers who interact with your product or service within a day.
To calculate DAU, you have to find the sum of each day’s unique active users. Then, divide that result by the number of days in that respective month.
Daily Active Users (DAU) = Sum of Each Day’s Unique Users / Number of Days in the Month
18- Product Stickiness
Product Stickiness refers to the tendency of users that keep coming back to your product or service because they find value in it. Product Stickiness reminds everyone of another term: Customer Satisfaction.
Happy customers return to your product or service; meanwhile, dissatisfied customers churn. However, by gathering customer feedback, it’s possible to see from their point of view, learn their pain points and make effective changes to get them back to your product—both scenarios will only drive growth as your product becomes an essential item for your customers.
To calculate Product Stickiness, you have to find your DAU (Daily Active Users) to MAU (Monthly Active Users) ratio.
Product Stickiness = DAU / MAU
19- Pages/Clicks/Actions Per Session
Pages per Session, Clicks per Session, and Actions per Session are metrics that support the stickiness of your product since they reveal how engaging your product is.
- Pages per Session refers to the average number of pages that users access per session. To calculate it, you have to divide the number of pageviews by the total number of sessions.
- Clicks per Session refers to the average number of clicks that users click on your website per session. To calculate it, you have to divide the number of clicks by the total number of sessions.
- Actions per Session refers to the average number of actions that users perform per session. To calculate it, you have to divide the number of actions by the total number of sessions.
On another note, if these metrics have a high average, your website must look interesting to the eyes of an average visitor.
20- Session Duration
Session Duration refers to the length of time that starts when a visitor views your page and ends when they exit or remain inactive for some time. As long as a visitor interacts with your site, the session will continue.
To calculate Session Duration, you have to divide the total duration of all on-site sessions by the number of sessions.
Session Duration = Total Duration of All Sessions / Number of Sessions
To achieve customer success, each team has a lot of items on their to-do lists.
For product marketing managers, the list might be full of subjects regarding product positioning and sales enablement, but this article fully focuses on the metrics and KPIs they have to track in order to measure the impact of their plans.
Hope you have fun reading this complete list of the top metrics and KPIs that measure product marketing success!
Frequently Asked Questions
What are the top 5 product marketing metrics and KPIs?
Top five product marketing metrics and KPIs that interest product marketing managers are User Retention Rate, Customer Acquisition Rate, Free Trial to Paid Conversion Rate, Product Adoption Rate, and Product Stickiness.
Why should product marketing managers be obsessed with data?
Product marketing managers analyze data to make well-thought decisions regarding any area related to the product itself. For example, it might be about deciding on the next strategy they’ll apply in their marketing campaign or providing insight to improve the other decision-making processes, such as the product’s design.